| The Tax Publishers2019 TaxPub(DT) 8362 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
Where impugned expenditure was incurred by assessee for organizing conferences for promotion of her business and the same was not incurred for pre-wedding function lunch as alleged by AO, the disallowance made by the AO out of business promotion expenses was liable to be deleted as the same was made without corroborating evidences and without cross examining the parties.
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Business expenditure - Allowability - Business promotion expenses - AO alleged that expenditure was incurred in connection with pre-wedding function lunch
Assessee claimed expenditure under the head business promotion expenses. On scrutiny, it was found that certain amount out of total such expenses, was used by the assessee for arranging business conference at a hotel 'T'. However, AO obtained information under section 133(6) from 'T' that the said amount was made by the assessee in connection with pre-wedding function lunch. Accordingly, the AO held that the claim of the assessee that expenditure was for business conference was incorrect and hence, such amount was disallowed. With regard to balance expenditure, the AO noted that the same included personal element and hence, he disallowed 1/5th out of the balance expenditure. Held:It was found that assessee was organizing regular conferences to promote her business for which expenses were being incurred. However, AO disallowed the said expenditure solely based on a letter from 'T' in which pre-wedding function was noted, whereas the fact on record suggested that there was no wedding ceremony took place in the family of the assessee during relevant year under consideration. Further, the function was organized for lunch only and the expenditure incurred did not suggest any expenditure on account of DJ, flower decoration, stage etc., suggesting that there was any marriage function organized in the family. Further, the invoice issued by 'T' and banquette challans did not mention any pre-wedding function. Therefore, such circumstantial evidences lead to infer that the expenditure was in the nature of business promotion only and thus, the disallowance made by the AO was deleted as the same was made without corroborating evidences and without cross examining the parties. With regard to 1/5th of the disallowance of remaining expenses, it was found that out that, some of the expenses were in the nature of personal expenses, the AO was justified in making disallowance of 1/5th of the remaining expenses.
REFERRED :
FAVOUR : Partly in favour of assessee
A.Y. : 2011-12
INCOME TAX ACT, 1961
Section 37(1)
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